A mountain of coal and a mountain of debt

Despite a huge restructuring plan announced in October 2013, the head of Polish company Kompania Weglowa – the largest coal miner in the EU – cannot see a way back from the vast amounts of debt the mining giant owes, at least not in the immediate future.

“This year we will finish in the red, because it can't be otherwise, and the same is likely for the next two years,” CEO Miroslaw Taras said at the European Economic Congress in Katowice.

Taras stressed that the company has 5 million t of unsold coal and that the cost of production remains high.

The company lost 1 billion zloty (€ 237.7 million) on sales of coal in 2013. Global prices of thermal coal have dropped by 13% since 2011, and those of metallurgical coal by 23%.

“The board is currently focusing on the most urgent matters relating to restoring our liquidity, while at the same time we want to develop a restructuring programme as soon as possible," Taras said. “If we fail to do this, then nothing will happen and we will have to declare bankruptcy.”

Kompania Weglowa may be the largest coal-mining company in Europe, but the company’s board halted production at several of its mines for over a week in May, owing to a low demand and a vast stockpule of unsold material continuing to accumulate.

It’s previous restructuring plan included the merging of a number of mines, as well as swathes of job cuts (mostly in administrative positions).

Despite the bleak circumstances he finds himself in, Taras remained upbeat:” I'm an optimist, and I'm not thinking about the blackest scenario,” he said.